Two growth stocks with great potential for 2024 and beyond

The best way to succeed in the stock market is to find companies that not only have great long-term prospects, but also, importantly, catalysts that can push the stock price higher in the short term.

Here are two promising stocks that could deliver big returns in the coming years.

1. Taiwan semiconductor manufacturing industry

Taiwan semiconductor manufacturing industry (TSM 1.85%) It enjoys a profitable position as one of the leading chip foundries. Last year, it earned close to $69 billion in sales and $27 billion in net profit. High profit margins reflect a significant competitive moat based on a commitment to producing high-quality chips, which has attracted business from: nvidia, advanced micro devicesOther semiconductor companies.

TSMC makes a variety of chips used in everything from smartphones to data centers. While demand for artificial intelligence (AI) chips in data centers is currently the hottest item, end-market demand is weak in other markets using TSMC chips. The company’s sales in the first quarter were down 5% compared to the fourth quarter.

Nevertheless, the stock price remains close to the new high. The shift to AI-optimized servers in the data center market is a major growth catalyst for TSMC, and another catalyst may emerge later this year as the PC and smartphone markets continue to recover.

TSMC, in particular, is benefiting from strong demand for Nvidia’s graphics processing units (GPUs) used in AI training. The Wall Street consensus is for the company’s earnings per share to grow at a 22% annual rate over the next few years, which also assumes an eventual recovery in all of TSMC’s end markets.

TSMC offers above-average growth prospects at its average valuation. The stock is currently trading at a reasonable forward price-to-earnings (P/E) ratio of 24, so investors should receive better-than-market returns even at these highs. By the time TSMC is clicking on all cylinders again, the stock will likely be trading at higher P/E multiples.

2. Uber technology

uber technology (Uber 1.04%) It has emerged as a powerhouse in the global transportation market. The platform includes more than 7 million drivers and couriers. The company is seeing double-digit growth in all the right metrics – travel, monthly active customers, revenue, etc. – but if profits start to grow as well, the stock could offer significant upside.

Uber sees strong demand in its mobility business, including ridesharing. The number of trips increased 21% in the first quarter compared to the same period last year. Management is expanding accessibility to Uber by adding more restaurants to the platform, in addition to expanding into areas like grocery delivery, all while limiting costs.

The recent decline in the stock price provides investors with a good entry point to initiate a position or purchase more shares. In the first quarter, Uber turned an operating loss from a year ago into an operating profit. This is starting a strong trend of profitable growth, which is a catalyst for the stock.

Wall Street consensus expects Uber’s revenue to grow at a rate of 45% per year. If Uber hits its 2026 EPS estimate of $4.30 and the stock is still trading at its current forward P/E of 32, investors should realize returns similar to the company’s earnings growth.